The Economic Interests Behind the Conflict in Ukraine

by Roger Keeran, published on MLToday, August 10, 2023

Anyone paying the slightest heed to the conflict in the Ukraine can appreciate the utter falsity of the American narrative of its cause, namely that the dictator Vladimir Putin embarked on an “unprovoked” war in a bloodthirsty effort to restore the Russian czarist empire.   Alas, most Americans are not paying heed, so the narrative marches shamelessly on, like the emperor with no clothes.

Fortunately, such academics as John Mearsheimer and Jeffrey Sachs and The Nation have explained that this conflict was indeed provoked, provoked by the United States that since the collapse of the Soviet Union has recklessly expanded NATO to the entire western border of Russia, an obvious threat to Russian national security.   The United States intends to include the Ukraine in NATO’s embrace, and since 1991 it has blatantly interfered in the internal politics of the Ukraine to support forces favorable to the West.  This has included supporting a coup against the duly elected president Victor Yanoukovitch in 2004, backing the so-called Maidan rebellion of 2014, undermining the so-called Minsk Accords (I and II of 2014 and 2015), and backstopping the current corrupt president Volodymyr Zelensky.

A recent book  in French by the Italian economist Giulio Palermo, Le Conflit Russo-Ukrainien: L’imperialisme US à la conquete de l’Europe (Editions Delga, Paris, 2022),  not only recounts this history but goes far beyond anything I have seen in English in explaining the economic interests of American imperialism in this conflict.

Of course, it does not take an economic genius to see that the big winner in this conflict is neither Russia nor Ukraine, but the American arms industry.  Since the conflict began Ukraine has received more that $75 billion making it far and away the top recipient of American foreign aid in the world.  This includes $18.3 billion in security assistance, $23.5 billion in weapons and equipment and $4.7 billion in grants and loans for weapons. (Council on Foreign Relations, July 10, 2023).   Of course, the bulk of this money goes right into the pockets of U.S. arms manufacturers.  Lockheed Martin supplies Javelin anti-tank missiles and Himars rocket launchers.  Raytheon supplies Javelin missiles and Stinger anti-aircraft missiles, and so forth.

Palermo goes beyond this obvious fleecing of the America taxpayer to explain that two of the main beneficiaries of this conflict are American banking and investment interests linked to agriculture and the American oil and gas companies.

American banks and investment companies have a longstanding interest in gaining control of Ukrainian agriculture, the so-called breadbasket of Europe.   As far back as 2014 the pro-western president, Petro Porochenko, negotiated a $15.5 billion loan from the International Monetary Fund (IMF) that insisted in return on the liberalization of land sales, that is to say the sale of state land to private investors.  This meant an end to a government moratorium on such sales that had existed since 2001. Under Volodymyr Zelensky, the privatization of land expanded.   On March 31, 2020 the Zelensky government rammed through an unpopular law legalizing the sale of farmland, a measure long demanded by the IMF and other international investors.

According to a February 2023 report by the Oakland Institute, a think tank, about five million hectares (double the size of Crimea) of the most fertile land in the world “have been ‘stolen’ by private interests from the state of the Ukraine.”  Altogether more than 28 percent of the arable land is now controlled  by “oligarchs, corrupt individuals, and large agribusinesses.”

American financial interests (as well as European and Saudi Arabian) are the main investors and beneficiaries of this process.   Among these are Vanguard, (a Pennsylvania-based financial company that is the largest provider of mutual funds in the world) and Goldman Sachs-owned NN Investment Partners Holdings.   According the to the Oakland Institute, “several large US pension funds, foundations, and university endowment are also invested in Ukrainian land through NCH Capital — a US-based private equity fund, which is the fifth largest landholder in the country” (Ukraine).   The Oakland Institute could not be clearer:  “The above points to Ukraine’s agricultural land being a major stake in the war.”

Another stake in the war, perhaps even greater than Ukrainian farmland, is the European market for gas and oil.  Like farmland, gas and oil interests have been almost completely ignored by American commentators.   The great benefit of Palermo’s account is that he explains how the war fits into the long-term strategies of the American gas and oil companies abetted by whatever administration is in Washington.   Historically, this market heavily depended on Russian gas and oil.  At the start of the war,  the European Union imported 40 percent of its natural gas and 25 percent of  oil (pétrole) from Russia.

U.S. oil companies have long hungered for this European market.  This hunger intensified after the financial crisis of 2007-2009, when massive new investments in oil and gas increased the U.S. production of natural gas by 70 percent (between 2011 and 2014) and  made the U.S. the largest producer of oil (pétrole) in the world surpassing both Russia and Saudi Arabia).  American oil and gas companies needed an outlet for this surplus.  After having previously used military and economic attacks against the historic providers of gas and oil to Europe (Iran, Iraq, Libya, and Venezuela),  the U.S. had one remaining rival for the European market — Russia.

On behalf of the oil companies, Washington went after European dependence on Russian energy.   Washington opposed the Nordstream pipeline, a plan to supply European natural gas needs by a pipeline running from Russia to Germany (Nordstream I (two actual pipes) and Nordstream 2 (two pipes).   The pipeline began operation in 2011.   Russian invaded Ukraine in February 2022, and on September 26, 2022, the Nordstream pipeline was  blown up by three separate explosions.  No one claimed responsibility, but anyone with a brain could see that the only beneficiary was the U.S. gas and oil companies.

After the Russian invasion, the U.S. reacted by imposing three strict economic sanctions designed to cripple the Russian economy.    The first was the freezing the assets of the Russian state bank abroad.  The second was to exclude Russia from the main international monetary exchange system known as Swift.  The third measure was imposition of sanctions against the importation of Russian gas and oil, sanctions that Washington pressed Europe to follow.   Given its much greater dependence on Russia (whereas the U.S. imported virtually no Russian gas or oil), the lack of sufficient infrastructure to handle American gas and oil, and the higher price of American products, Europe has found it difficult to comply.  Nevertheless, American gas and oil companies benefitted from the war and the sanctions.  By 2022 Europe had become the primary destination for American liquified natural gas, accounting for 65 percent of all exports, an all-time high for American gas exports to Europe.

Any objective assessment of U.S. policy toward Ukraine would have to conclude it is an abject failure with one glaring exception.   All of the weapons and training have not turned the tide for Ukraine;  the failing Ukrainian spring/summer offensive shows that.  More arms for the Ukraine have just meant more death and destruction.   Nor have the arms and sanctions had any effect on Russian policy or economy.   Russia replaced its exports to Europe by finding new markets in China, India and elsewhere.   The ruble after falling slightly after the onset of the conflict, is now as strong as ever.   The Europeans who pay more for energy have hardly benefitted by U.S.-imposed sanctions on Russia.   Africans have not benefitted by the war-induced escalation of grain prices. Nor has the war benefitted American taxpayers who must pay for the greatest military boondoggle since Afghanistan.

The only clear winner in this bloody conflict is American imperialism,  namely the American military industry, American banks and equity firms tied to Ukrainian agriculture, and American gas and oil companies that have seized the European market.

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